Daran Wastchak, D.R. Wastchak, LLC. Kelly Parker, Guaranteed Watt Saver Systems

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1 Daran Wastchak, D.R. Wastchak, LLC Kelly Parker, Guaranteed Watt Saver Systems Course Objectives Provide comprehensive overview of Home Energy Rating industry for those new to / unfamiliar with ratings Prepare conference participants for other conference sessions 1

2 Presentation Outline History and Overview Joining the Rating Industry National Home Energy Rating Standards Rater Resources Completing a Rating Energy Mortgages History and Overview History of the Rating Industry Group of mortgage industry leaders set up the National Shelter Industry Energy Advisory Council Goal - Measure the monetary savings attributable to the energy efficient features of a home Goal - Giving credit for energy efficiency in a mortgage Council created Energy Rated Homes of America Early 1980 s - Fannie Mae, Freddie Mac, the U.S. Department of Housing and Urban Affairs, Federal Housing Administration (FHA) and the Veterans Administration (VA) all adopted energy mortgage programs 2

3 History and Overview History of the Rating Industry (cont d) April Representatives of the national mortgage industry, the National Association of State Energy Officials, and Energy Rated Homes of America founded the Residential Energy Services Network (RESNET) Goal - Develop national standards for home energy ratings and to create a market for home energy rating systems and energy mortgages RESNET became incorporated as a 501 (c) (3) non-profit organization and Energy Rated Homes of America merged into the organization 2002 First RESNET National Conference in Coco Beach, FL History and Overview RESNET Key services Maintain National Home Energy Rating Standards Accredit Rating Providers, Rating Software Programs and Rater Training Providers Work with the Mortgage Industry in Developing and Promoting New Energy Mortgage Products 3

4 History and Overview Board of Directors President Philip Fairey Vice President David Goldstein Treasurer Thomas Hamilton Secretary Kelly Parker Immediate Past President David Wilson Ben Adams, MaGrann Associates Eric Borsting, ConSol Megan Edmunds, E-Star Colorado Richard Faesy, Vermont Energy Investment Corporation Philip Fairey, Florida Solar Energy Center Kathy Howard, Energy Sense Joseph Lstiburek, Building Science Corporation Greg Nahn, Wisconsin Energy Conservation Corporation Lee O'Neal, NSpects, LTD Kelly Parker, Guaranteed Watt Saver Systems Bruce Harley, Conservation Services Group Douglas Walter, Kansas Building Science Institute Michael Holtz, Architectural Energy Corporation Tracy Fogelsong, EnerCalc Mark Jansen Energy Rated Homes of Indiana Gayle Sampson Ohio David Wilson -Energy Rated Homes of Utah Daran Wastchak D.R. Wastchak, LLC David Goldstein, Natural Resources Defense Council History and Overview Standing Committees Quality Assurance and Ethics Committee Issues interpretations on Chapter One of the national rating standards Oversight of RESNET s rating quality assurance program Investigates and makes recommendations on code of ethics complaints Training and Certification Committee Issues interpretations on Chapter Two of the national rating standards Maintenance of the national rater test Approval of all RESNET education programs Maintenance of RESNET rater certification categories 4

5 History and Overview Standing Committees (cont d) Technical Committee Interpretation of technical standards, procedures and guidelines (Chapter 3) Technical evaluation of issues and programs Continuing maintenance of technical standards Membership Services Committee Develops plans for recruitment of members and board members of RESNET Serve as the nominations committee for the board Provide policy oversight for the annual RESNET Conference History and Overview Membership Associate Member non-rater membership Rater Member certified rater membership Trial Member free 30-day trial period Providers Rating Providers Rater Training Providers Rating Software Developers BOP (Builder Option Package) Providers 5

The Home Energy Rating Industry Board of Directors Standing Committees: Quality Assurance & Ethics Committee Training & Certification Committee Technical Committee Membership Services Committee

6 The Home Energy Rating Industry Board of Directors Standing Committees: Quality Assurance & Ethics Committee Training & Certification Committee Technical Committee Membership Services Committee National Home Energy Rating Standards Home Energy Rating System (HERS) Rating Program Administration Rater Training and Certification Technical Guidelines Code of Ethics Standards of Practice Financial Interest Disclosure Energy Programs Mortgage Industry State & Federal Tax Credits Rater Training Providers Rating Software Developers BOP Providers Rating Providers HERS Raters HERS Raters HERS Raters Joining the Rating Industry Becoming a Rating Provider $500 application fee (non-refundable) $1,500 total annual fee Meet accreditation criteria: Raters must be trained by a RESNET accredited rater training provider Meet certification standards (Complete requirements available in Chapter One of Mortgage Industry National Home Energy Rating Systems Accreditation Standards) 6

7 Joining the Rating Industry Becoming a Rating Provider HERS Operation Policies & Procedures must be written and provide for the following: Ratings from plans Field inspections Blower door tests Duct leakage testing Written conflict of interest provisions Written rater discipline procedures Written rater quality control process Joining the Rating Industry Becoming a Rating Provider Accreditation Process State Energy Office Review Where state does not operate a Home Energy Rating System file application with the appropriate state energy office Where state does operate a Home Energy Rating System file self-certification statement For a home energy rating system which desires to operate in a state that operates its own home energy rating system, the Committee shall inform the state and provide an opportunity for the state to provide comments. 7

8 Joining the Rating Industry Becoming a Rating Provider Home Energy Rating System Application for Renewal Suspension and revocation of accreditation Appeals procedure for applications that are not approved as well as suspension & revocation of certifications Joining the Rating Industry Becoming a Certified Rater Complete rater training with RESNET certified Rater Training Provider Pass National Rater Training Exam Complete five (5) ratings which are supervised/ reviewed by Training Provider or Rating Provider Select and work under a Rating Provider Meet any specific requirements established by Rating Provider 8

9 National Home Energy Rating Standards Chapter 1 - Rating Program Administration Chapter 2 - Rater Training and Certification Chapter 3 - Technical Guidelines National Home Energy Rating Standards Comprehensive Enhancement of RESNET National Home Energy Rating Standards WHY? Enhance the Quality and Consistency of Ratings as Rating Industry Expands to Meet Growing Demand for Rating Services Two Categories of Enhancements Program Administration (Will not affect rating score) Goes into effect on April 1, 2005 Technical (Will impact how rating scores are calculated) Goes into effect on January 1,

10 National Home Energy Rating Standards Program Administration Enhancements Rater Financial Interest Disclosure Rating Software Verification Testing Clearer Rating Quality Assurance Provisions National Home Energy Rating Standards Program Administration Enhancements Rater Financial Interest Disclosure Standardized disclosure form that Raters must complete and give to their clients which states their financial interest in the home being rated Requires Rating Providers to provide disclosure form to builders/homebuyer upon request Rating Software Verification Testing Requires Rating Providers to use only RESNET accredited rating software programs Have 60 days upon release of updated version of program to use old version Can use older version of software on project where projected rating has been completed 10

11 National Home Energy Rating Standards Program Administration Enhancements Clearer Rating Quality Assurance Provisions Provider Policies & Procedures must include at a minimum: Review of ratings conducted during a rater s probation period Review of a minimum of 25% of each rater s rating data files Field monitoring of rater s ratings: Complaint Response System for Receiving and Responding to Consumer Complaints. Rating Record Keeping Rating Provider Quality Assurance Designee National Home Energy Rating Standards Program Administration Enhancements Clearer Rating Quality Assurance Provisions RESNET Quality Assurance Review of Providers Annual random selection of providers to conduct review of files Significant inconsistencies or errors in the files reviewed may result in a independent field review by RESNET representative RESNET process for receiving ethics complaints against accredited provider 11

12 National Home Energy Rating Standards Rater Training and Certification Enhancements National Rater Testing Requires that by January 2008, all existing certified raters must pass the National Home Energy Rating Test administered by RESNET Rater Continuing Education Requirements 12 Credit hours every three (3) years 10 of the 12 hours of rater continuing education must be approved by RESNET National Home Energy Rating Standards Technical Enhancements Goals of Technical Enhancements Enhance the Technical Basis of Energy Ratings Update Rating Standards to bring into alignment with current national standards (IECC, Zero Energy Homes, Proposed Tax Credits) Key Technical Enhancements Align rating reference home to the IECC Voluntary option of expanding rating score to credit efficient lighting and appliances and on-site production of energy in the rating score Clearer insulation inspection procedures Definition of standards for measuring air tightness Enhanced blower door procedures Procedures for measuring floor dimensions Auxiliary energy consumption 12

13 National Home Energy Rating Standards Technical Enhancements Key Technical Enhancements (cont d) Coefficients for oil heat Renewable energy sources in the reference home Natural ventilation rates in the reference home Discount rate and life of measures used for energy mortgages Standardized economic calculation of present value for energy mortgages Default framing factors for enclosed elements HEIR for heat pumps Proper sizing for heat pumps and air conditioners Biomass fuel efficiencies Home inspection standards Definition of a home Future guideline requirements Rater Resources Rater Codes of Ethics Rating Standards of Practice Rater Financial Interest Disclosure 13

14 Rater Resources Rater Codes of Ethics Sets forth principles and rules of conduct for accredited RESNET Rating Providers, their Raters and their representatives. Professional Conduct Representation of Services and Fees Conflicts of Interest Rater Resources Rating Standards of Practice Establishes minimum and uniform standards for certified raters Minimum rated features Rating report General limitations and exclusions 14

15 Rater Resources Rater Financial Interest Disclosure Standard Form that Discloses Rater Financial Interest in Home being Rated Beginning on April 1, 2005, all Raters Must Provide to Their Clients and Providers Completing a Rating New Homes Obtain a set of drawings from builder Complete a rating of house design from plans using RESNET approved software Set target, minimum standard for rated features of home (i.e. max duct leakage, max envelope leakage, minimum quality of insulation, etc.) Complete testing and inspections on home during construction So long as rated features meet minimum standards set forth by rating, home passes and can be certified when completed/labeled 15

16 Completing a Rating Existing Homes Complete on-site inspection to determine Physical dimensions of home Water heater size and type Window size and type Insulation type, level and quality Air conditioner and heater size and type Duct leakage Envelope leakage Using collected data, complete rating of house design by inputting into RESNET approved software If software indicates that the house design complies with minimum requirements (e.g. HERS score of 86), home passes and can be certified when completed Energy Mortgages Energy Efficient Mortgages (EEM s) factor the cost of energy improvements and the value of energy savings into the loan calculations. EEM s require a HERS Rating Report Energy improvements must be cost effective EEM s are recognized by Fannie Mae, Freddie Mac, FHA and VA Energy Improvement Mortgages (EIM s) are exactly like EEM s except for existing rather than new homes. 16

Energy Mortgages EEM s and New Construction Energy Star labeled Homes automatically qualify for an EEM Builders who pay for the cost of a HERS rating on a new home can

17 Energy Mortgages EEM s and New Construction Energy Star labeled Homes automatically qualify for an EEM Builders who pay for the cost of a HERS rating on a new home can offer their own Energy Star EEM EEM s help to qualify marginal buyers for a new home that they would not have otherwise been able to buy Fannie Mae s new DREEM mortgage 17

18 Energy Mortgages EIM s and Existing Homes Can be used for purchase or re-finance of an existing home Allows home buyer to make improvements to a home immediately after move-in rather than wait for a later time when they have the money High interest, zero equity Second Mortgage is no longer required to finance improvements Improvement work is coordinated by a professional facilitator using pre-qualified, expert contractors EIM FLOW CHART Find a home that looks like a good candidate for an EIM: 15+ year old a/c Evap. cooler, no a/c Single pane windows Poor or no insulation Pre-qualify the home buyer or homeowner wanting to finance/refinance Schedule a HERS inspection with a HERS provider: preliminary cost effectiveness check HERS provider completes HERS Report, obtains quotes from contractors for improvements, and determines if making improvements is cost effective IF COST EFFECTIVE Lender puts extra funds to pay for improvements into an Escrow holdback account Mortgage is funded, escrow closes, home buyer moves in! Improvements are made (30 90 days), final inspection is completed, contractors are paid out of Escrow holdback account 18

19 Energy Mortgages Fannie Mae Qualify for larger mortgage Borrowers get the benefit of the energy savings added to their income for qualification purposes Finance energy retrofits Energy improvements to existing homes can be up to 15% of home s value Finance up to 100% of improvements Improvements paid over life of mortgage Energy value adjusts LTV For new construction: appraised value of property plus present value of efficiency improvements For retrofits: as-is value plus cost of improvements or as-completed value Energy Mortgages FHA $4,000 or 5% of the appraised value (whichever is greater) up to a maximum of $8,000 No additional down payment on the energy improvements if the improvements have a present value greater than the cost of the energy upgrades. FHA maximum loan limits can be exceeded by the energy improvements being financed Final LTV may exceed 100% of appraised value when the energy improvements have a present value greater than the cost of upgrades All improvements identified by home energy rating as having a combined present value greater than the cost of upgrades 19

20 Energy Mortgages VA 100% of the energy improvements subject to the following limits: Up to $3,000 based solely on documented costs Up to $6,000 provided that the home energy rating projects the reduction in monthly energy savings exceed the increase in the monthly mortgage payment No additional down payment on the energy improvements if the improvements can create positive cash flow The total loan amount after adding the costs of the energy improvements can not exceed VA loan limit Final LTV may exceed 100% appraised value if energy improvement measures have positive cash flow Energy Mortgages Freddie Mac No limit on improvement financing if supported by value Requires down payment related to the LTV of the base loan which includes energy upgrades PITI increases dollar-for-dollar to reflect energy savings Can not exceed maximum loan limits Energy improvements can be added to market value through a energy rating from a RESNET/NASEO accredited home energy rating system or Addendum to Appraisal Form 70A. Loan amount including energy upgrades cannot exceed 95% LTV All improvements identified by home energy rating 20

21 Presentation Recap History and Overview Joining the Rating Industry National Home Energy Rating Standards Rater Resources Completing a Rating Energy Mortgages THANK YOU & Good Luck! 21

CLEARINGHOUSE. Financing an Energy-Efficient Home ENERGY EFFICIENCY RENEWABLE AND

CLEARINGHOUSE. Financing an Energy-Efficient Home ENERGY EFFICIENCY RENEWABLE AND U ENERGY EFFICIENCY AND RENEWABLE ENERGY CLEARINGHOUSE Financing an Energy-Efficient Home The average homeowner spends close to $1,300 a year on utility bills. But an energy-efficient home with such features